Your company is evaluating a new factory that will cost $14 million to build. Your target debt-equity ratio is 1. The flotation cost for new equity is 7% and the flotation cost for new debt is 4%. The company is planning to use retained earnings for 50% of the equity financing. What are the weighted average flotation costs as a fraction of the amount invested? What are the flotation costs (in $ million )?

What will be the Return on Equity on these financial accounting question?

You are given the following information concerning a firm:Assets required for operation: $5,100,000Revenues: $8,400,000Operating expenses: $7,850,000Income tax rate: 40%. Management faces three possible combinations of financing: 100% equity financing 30% debt financing with a 8% interest rate 60% debt financing with a 8% interest rate   What is the net income for each combination of debt and equity financing? Round your answers to the nearest dollar.     1 2 3 Net income $     $     $       What is the return on equity for each combination of debt and equity financing? Round your answers to one decimal place.     1 2 3 Return on equity   %     %     %     If the interest rate had been 16 percent instead of 8 percent, what would be the return on equity for each combination of debt and equity financing? Round your answers to one decimal place.     1 2 3 Return on equity   %     %     %     What is the implication of the use of financial leverage…

A firm will earn a taxable net return of $500 million next year. If it took on debt today, it would have to pay creditors\varepsilon(rDebt) = 5% + 10% x wDebt2. Thus, if the firm has 100% debt, the financial markets would demand 15% expected rate of return. Further, assume that the financial markets will lend the firm capital at this overall net cost of 15%, regardless of how the firm is financed. The firm is in the 25% marginal tax bracket. 1. If the firmis fully equity-financed, what is its value? 2. Using APV, if the firm is financed with equal amounts of debt and equity today, what is its value? 3. Using WACC, if the firm is financed with equal amounts of debt and equity today, what is its value? 4. Does this firm have an optimal capital structure? If so, what is its APV and WACC?

Spellbound Solutions estimated future capital investment needs aré $ 1200m, and the estimated future net income is $1200m. If the company finances itself with 40 percent debt and 60 percent equity, how much in dividends can the company afford to pay? a. $0m b. $420m c. $480m d. $720m e. $900

igital Organics (DO) has the opportunity to invest $1.03 million now (t = 0) and expects after 2. The project will last for two years = - tax returns of $630,000 in t = 1 and $730,000 in t only. The appropriate cost of capital is 11% with all - equity financing, the borrowing rate is 7%, and DO will borrow $330,000 against the project. This debt must be repaid in two equal installments of $165,000 each. Assume debt tax shields have a net value of $0.20 per dollar of interest paid. Calculate the project's APV.

A new project is being considered by a P company. The debt-equity ratio of .75. The company's cost of equity is 15.0 percent, and the after-tax cost of debt is 4.0 percent. The project is considered riskier by the company than the company as a whole and an adjustment factor should be use of +1.2 percent. Calculate the project cost of capital if the tax rate is 32 percent? A) 10.08 percent B) 11.49 percent C) 11.02 percent D) 16.14 percent

What is the Minimum return in pesos

General accounting

For examples 1 and 2, assume the net cash flow is 2,000,000, the tax rate is 40% and the cost of common equity is 10% which is computed using the CAPM equation. Explain in a few sentences what each example means.